The "Hinomaru liquid crystal display" has suffered a setback. Reliance on the backing of the government was apparently a factor behind the sluggish moves and mistaken business projection.
It has been announced that leading LCD manufacturer Japan Display Inc. will try to rehabilitate itself under the umbrella of a Taiwan-Chinese consortium. JDI will receive a maximum of 80 billion yen in assistance from the consortium.
The public-private fund INCJ, formerly known as the Innovation Network Corporation of Japan and which has a 25 percent stake in JDI, will lose its status as the largest shareholder.
Current and past management teams that failed to rebuild the company, despite repeated assistance, bear a heavy responsibility. The Economy, Trade and Industry Ministry and INCJ have to evaluate whether their investment decisions were appropriate, as lessons for the future.
As seen in the business failure of leading semiconductor maker Elpida Memory Inc., there have been quite a number of failures among cases in which the government took the initiative in business integration. One factor has apparently been a vague locus of responsibility stemming from the makeshift nature of the management teams.
JDI was established in 2012 by integrating the small and medium-size LCD businesses of Hitachi, Ltd., Sony Corp. and Toshiba Corp. The former Innovation Network Corporation of Japan led the realignment and METI backed it.
The company is strong in the field of LCDs for smartphone use, and had increased sales through significant business with Apple Inc. of the United States. However, JDI's earnings have deteriorated because liquid crystal panel prices have declined due to intensified competition with South Korean and Chinese companies, which have gone on the offensive with massive investments.
Look beyond smartphones
Affected by its overdependence on smartphones, the company is expected to be in the red for the business year ending March 2019, its fifth straight business year at a loss. This is highly regrettable, as the company was a symbol for Japan, which was called a "kingdom of liquid crystal."
At a news conference, JDI President Yoshiyuki Tsukizaki expressed his intention to accelerate their departure from "sole dependance on smartphones," but it cannot be denied that this has come too late.
JDI employs nearly 10,000 workers in its group, and has five domestic factories in Ishikawa and other prefectures. It is said the company will consider consolidation of its domestic business bases. JDI is urged to rebuild its strategy quickly.
An immediate task is how to recover from its late start in the business of thin, power-saving "organic electroluminescence panels." Rival overseas manufacturers are financially strong, and tough competition is expected.
Fortunately, its business in such fields as LCDs for vehicle instrument panels and car navigation systems is on firm ground. Stable earnings can be expected compared to smartphone products, demand for which fluctuates significantly. The company must strengthen its business in products for non-smartphone use.
Of concern are the effects of the spat between the United States and China. The Committee on Foreign Investment in the United States (CFIUS), which examines acquisition of U.S. companies by foreign companies, may not approve JDI's rehabilitation plan.
JDI is not a U.S. company, but it has major transactions with Apple. The CFIUS has considerable discretion, and it is worth watching how it judges the involvement of a Chinese company.
(From The Yomiuri Shimbun, April 17, 2019)
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